This application is in response to RFA-DK-09-012: Pilot Studies for Studying the Mechanisms of Improvement in Type 2 Diabetes and Cardiovascular Risk Factors after Bariatric Surgery. Current estimates indicate that 11.3% of the US population have type 2 diabetes and in many US states over 30% of the population are obese. The identification of effective therapies for obesity and type 2 diabetes is clearly an urgent public health need. Roux- en-Y gastric bypass (RYGB) surgery represents a therapeutic approach that produces long term weight loss and may lead to the complete resolution of T2DM; such a finding holds exceptional significance for the management of this recalcitrant disease. RYGB is a bariatric procedure that involves stapling the upper stomach to reduce stomach capacity to 15-30 mls and bypassing the remaining stomach, duodenum and a small portion of the jejunum. We and others have shown that gastric bypass surgery has significant long-term effects on weight loss, the resolution of type 2 diabetes, and has a positive effect on cardiovascular risk factors in extremely obese patients. The objective of this application is to evaluate the effects of RYGB surgery on glycemic control and underlying mechanisms that contribute to type 2 diabetes in moderately obese subjects (BMI: 30-40 kg/m2). Our central hypothesis is that RYGB surgery will reduce hyperglycemia by reversing beta-cell dysfunction and decreasing hepatic and peripheral insulin resistance. The Specific Aims are: 1) to develop and implement a 12-month prospective randomized controlled clinical trial to test the effect of gastric bypass surgery versus advanced medical therapy and lifestyle on glycemic control in 60 obese patients with type 2 diabetes; 2) to determine the effects of gastric bypass surgery on pancreatic beta-cell function and incretin hormone secretion; and 3) effects on insulin sensitivity, ectopic lipid accumulation, and cellular signaling in skeletal muscle. The primary outcome variable is an HbA1c of d 6.5% at 12 months. Mixed meal tolerance tests will be used to assess changes in beta-cell function using an insulin/C-peptide kinetic modeling approach; and euglycemic hyperinsulinemic clamps will be used to evaluate insulin sensitivity. In addition, the underlying mechanisms will be explored by measuring incretin hormone responses (GLP-1/GIP), lipid accumulation in the liver and skeletal muscle using magnetic resonance spectroscopy, and insulin signaling pathways that regulate glucose uptake in skeletal muscle. The data that will be generated from the proposed studies will advance our understanding of the physiological mechanisms that link metabolic dysfunction in the pancreas, liver, and skeletal muscle with type 2 diabetes, and its resolution following bariatric surgery. The proposed trial will also provide important preliminary data to inform recruitment, retention, follow-up, and procedures for a longer-term trial that will compare surgery with advanced medical therapy, as we strive to identify the optimal treatment strategy to counter type 2 diabetes